How does a cash out refinance on rental properties work?
Mia Phillips
Updated on March 15, 2026
A cash-out refinance is one of the best tools an investor can use to take money out of their rental properties. A refinance is when you replace the current loan on your home with a new loan, and when you complete a cash-out refinance, you get cash back after getting the loan.
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How much equity do you need to refinance a rental property?
Many banks will require an 80% or lower loan to value ratio when refinancing a rental property and they will use an appraisal to determine that value. It is imperative that you have a lot of equity in your property if you want to complete a cash-out refinance with an investment property.
Is it good to cash out equity in rental property?
Cashing out equity is one of the best ways to profit from your investment property. Unused equity in the home may look good on paper, and for many investors, that’s fine. They have cash flow, and don’t want to increase their loan balance and payment. But a cash-out refinance rental property loan can put a good portion of the home’s value to work.
How long does it take to cash out a rental property?
Normally, the rental property home buyer would need to wait 6 months to get reimbursed per standard cash-out rules. That ties up a lot of cash for a long time — not the ideal situation for a savvy investor who wants to put their money to work elsewhere.
Can you fix and flip with a cash out refinance?
You may plan to fix-and-flip using a cash-out refinance to fund home improvements. While this is allowed, waiting periods apply. You must wait at least six months between the home sale closing and the date you can close on a cash-out refinance.
